QUESTION

Owner closing business and walking away

Asked on Sep 01st, 2021 on Corporate Law - Indiana
More details to this question:
We have an incorporated electrical company. 3 owners. 1 owner is walking out and we will be closing the co. how do the other 2 protect themselves from paying all the outstanding bills
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1 ANSWER

Appellate Practice Attorney serving New York, NY
You state that the company is incorporated.  Why then would any of the owners be responsible for any of its outstanding bills?  Have any of you signed personal guarantees?  As long as you operated the corporation properly, for example not commingling corporate money with personal, not paying personal expenses from coprorate funds, etc., the shareholders are not generally liable for the corporation's debts.  If, however, the debtrs you write about are among the few statutory exceptions to this rule, or that the corporation was not operated properly allowing personal liability of itss hareholders, you can't, at this point, protect yourself from the obligation (absent filing bankruptcy), you can only sue the third shareholder for his share of the obligation.
Answered on Sep 01st, 2021 at 12:28 PM

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